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Credit Unions vs. Banks: How to Determine Which One is Best for You

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Credit Unions vs. Banks: How to Determine Which One is Best for You

By Marco Carbajo, Guest Blogger
Published: November 25, 2011

<p>Selecting which type of financial institution to handle your personal or business banking account largely depends on your financial needs and personal interests.</p><p>Banks offer a wide range of services and are more accessible to customers on a larger scale. For example, if you have an account with a branch of Chase in Michigan, you can access that same account at any Chase branch and ATMs in Texas. This makes it easy if you are a frequent traveler.</p><p>With a credit union, you have limited ATM access all across the country. Credit unions typically have a limited number of branches, making it difficult if you need this type of access.</p><p>Banks are for-profit financial institutions owned by shareholders, not customers, of the bank. Their primary goal is to generate profits which they return to shareholders in the form of dividends.</p><p>In comparison, credit unions are member-owned and operated. A credit union is a collaborative, not-for-profit financial institution formed to supply credit to its members who are also its customers.</p><p>Another factor to consider is what type of fees banks and credit unions charge to manage your accounts.&nbsp; With over 50 fees that a typical bank can charge customers, it is essential to identify the fees each financial institution will impose when opening an account.</p><p>For example, banks generate substantial revenues from interchange fees they charge to retailers for debit transactions. These fees are something that customers never really paid attention to because the fees were imposed on the retailer.</p><p>But with recent regulations, the fees most banks can charge retailers will be cut from 44 cents to a cap of only 24 cents.</p><p>With a credit union, this is not an issue because a credit union&rsquo;s priority is to serve the needs of its members rather than to make a profit for shareholders.&nbsp; Because of this focus, a credit union is able to keep interest rates on deposits higher and loan rates and fees lower.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p><p>Here&rsquo;s a quick comparison of the key differences between credit unions and banks:</p><table border="1" cellpadding="0" cellspacing="0"><tbody><tr><td style="width: 149px; height: 18px;"><p><strong>Credit Unions</strong></p></td><td style="width: 142px; height: 18px;"><p><strong>Banks</strong></p></td></tr><tr><td style="width: 149px; height: 12px;"><p>Not-for-profit</p></td><td style="width: 142px; height: 12px;"><p>Profit-oriented</p></td></tr><tr><td style="width: 149px; height: 73px;"><p>Returns profits to members with lower loan rates, higher savings rates, and free or low-cost services.</p></td><td style="width: 142px; height: 73px;"><p>Returns profits to shareholders</p></td></tr><tr><td style="width: 149px; height: 47px;"><p>Each depositor is a member with share of ownership.</p></td><td style="width: 142px; height: 47px;"><p>Customers have no ownership in the corporation.</p></td></tr><tr><td style="width: 149px; height: 46px;"><p>Members elect a volunteer Board of Directors</p></td><td style="width: 142px; height: 46px;"><p>Controlled by shareholders and paid officials</p></td></tr><tr><td style="width: 149px; height: 15px;"><p>Member-service driven</p></td><td style="width: 142px; height: 15px;"><p>Profit-driven</p></td></tr><tr><td style="width: 149px; height: 62px;"><p>Federally insured by the National Credit Union Administration or a private insurer.</p></td><td style="width: 142px; height: 62px;"><p>Are federally insured by the FDIC</p></td></tr><tr><td style="width: 149px; height: 48px;"><p>Can serve only those people within their field of membership.</p></td><td style="width: 142px; height: 48px;"><p>Can serve anyone in the general public.</p></td></tr></tbody></table><p>&nbsp;</p><p>Banks and credit unions may differ on cost, convenience, customer service, financial products, and online banking. Whether you decide to open an account with a bank or credit union depends on your needs and what you value most.</p><p>Take the time to research your options and identify what benefits matter most to you. This will allow you to decide which the best choice is when it comes to handling your banking needs.</p><p>To locate a FDIC-insured institution you can use the <strong><a href="http://www2.fdic.gov/IDASP/main_bankfind.asp">Bank Find</a></strong> locator on the FDIC.gov website.</p><p>To find a local credit union you can utilize the NCUA&rsquo;s <strong><a href="http://www.culookup.com/">credit union locator</a></strong>. [<a href="http://www.ncua.gov/NCUAMapping/Pages/NCUAGOVMapping.aspx">http://www.nc... Carbajo is CEO of the Business Credit Insiders Circle (<strong><a href="http://www.businesscreditblogger.com/">http://www.businesscreditblogger....), a step-by-step business credit building system providing lines of credit, business credit cards, trade credit, and funding sources.</p>

About the Author:

Marco Carbajo

Guest Blogger

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in 'Fox Small Business','American Express Small Business', 'Business Week', 'The Washington Post', 'The New York Times', 'The San Francisco Tribune',‘Alltop’, and ‘Entrepreneur Connect’.

Comments:

Please save me from such a poor formatting! I really need some help with finding the best bank to work with, but I simply can't understand the article because of such formatting.
0 votes I agree that choosing the appropriate banking institution for your organization would mainly depend on your purpose of existence and services offered. Both credit unions and banks have its own advantages and disadvantages, but the most important thing to consider when making a choice is making sure that the one you lean on your financial account is reputable organization who can take care and serve your needs accurately. House and lot for sale This post was edited to remove a link. Please review our Community Best Practices for more information about how best to participate in our online discussions. Thank you.
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I agree that choosing the appropriate banking institution for your organization would mainly depend on your purpose of existence and services offered. Both credit unions and banks have its own advantages and disadvantages, but the most important thing to consider when making a choice is making sure that the one you lean on your financial account is reputable organization who can take care and serve your needs accurately. House and lot for sale
I must agree that for a frequent business traveler having bank accounts is the best choice. Since you are going to have access to your account anywhere. Limitations of credit unions are not the best choice for people to always travel Anyway, that will be depending on the business need and of course from the owners choice. Apartment for Rent in Mandaluyong
Banks and credit unions may differ on cost, convenience, customer service, financial products, and online banking. Whether you decide to open an account with a bank or credit union depends on your needs and what you value most. I'm in doubt
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